• Thu. Dec 1st, 2022

Real estate investments climb 5.3% year-on-year to $ 25.8 billion in 2021

The collective selling market gained momentum in the fourth quarter, according to Knight Frank.

Real estate investments jumped 5.3% year-over-year (YoY) in 2021, reaching $ 25.8 billion from $ 24.5 billion in 2020, according to Knight Frank.

Investments in the fourth quarter (Q4) of 2021 reached $ 7.3 billion, lower than the $ 14.5 billion recorded in the same period last year. This is due to the investment volume of residential sales of $ 2.8 billion “as demand remains healthy for prime residential homes.”

He also added that the collective selling market also started to gain momentum in the last three months of the year, consisting of five block deals made.

“Despite encouraging bulk activity from increasingly optimistic aging project owners, the imposition of cooling measures on December 15, 2021 gave the market a pause,” he said.

The government raised the Additional Buyer’s Stamp Duty (ABSD) and tightened the threshold for the total debt service ratio from December 16. He also tightened the loan value limit for Housing and Development Board loans from 90% to 85%.

Knight Frank also said that the lack of a substantial increase in the possible number of residential units in the first half of the 2022 government land sales listings “may prompt land-scarce developers to continue to consider the acquisition. of private plots by collective means, ”he said. .

The commercial market remained “relatively buoyant” last year as future supply space remains limited, he said.

“With the cooling measures casting a veil of uncertainty in the residential market, there could be spillover investor demand in the commercial arena that is exempt from [ABSD], “It said.

“This could eventually translate into an interest in the CBD incentive program sometime in 2022, where older commercial buildings are acquired in anticipation of a possible long-term global market. rebound from 2023, when air travel around the world is expected to return to pre-pandemic levels, ”he added.

The industrial sector, for its part, maintained its stable growth momentum, reaching $ 752.2 million.

Overseas investment deals by Singaporean investors amounted to S $ 20.2 billion in the fourth quarter, or 231.7% year-on-year due to the acquisition of logistics assets and offices in the foreigner.

For 2022, Knight Frank said more commercial properties are expected to be acquired as institutional investors seek assets to strengthen their portfolios. However, some investors in the luxury residential market may turn conservative due to the higher ABSD rates for overseas buyers.

“With the recently announced cooling measures rocking the market en bloc, homeowners seeking to collectively sell their homes will now have to recalibrate their price expectations

to align with the increased risks developers face if a sale is to be successful, ”he said, noting that demand for luxury private homes could also turn conservative, as buyers expect price increases are slowing down.

“Thus, the investment market in the coming year is expected to show a more moderate performance, with the total value of transactions for the whole of 2022 expected to fluctuate between S $ 20 billion and S $ 22 billion,” he said. -he adds.